Evening star. [volume] (Washington, D.C.) 1854-1972, 1887-03-03
THE LANGUAGE OF FINANCE.
Puts, Calls, Spreads and Straddles
clearly Explained by a Master.

From the New York Sun
vi tne n1ty or sixty millions of people in this
county,, Mr. John E. McCann. private secretary
10 the Hon. Russell Sage, said yesterday, "few
know the correct definition OF puts, calls.
spreads and 'straddles." Mr.. Mccain then
clearly described the peculiar methods of stock
speculation which are not recognized as legitimate
trahsactlons by the governors Of the Stock Ex-
change.
privilege Is contract by which the maker Of
it-hussel sage, s. v. White, or James R. Keene
tlh Inc old days before Mr.. Keene failed)-engages
sell TO the holder in the other case a number Of
sHaies oi some specified STOCK at certain price
az at any any e within certain period at the option
"A. "caiI Is privilege bought OF the maker at
oe eI t price, and the owner OF 1t is privileged to
can or certain amount OF stock at given price
months. '' "'Ns " ~ '" GA
rIdr =, man holds "put" he has the right to de-
ssr TO aae maker OF the privilege stock at
S TAN agreeu price within certain number of
GAYS Gays; FOR instance, suppose Western Union is
Ss i at 90 man wants sixty-oay put" on
down. He gives Mr.. Sage MIR White or Mr.. Keene
per cent on the amount OF stock he wants to
uea Ian M hundred shares IS usual and per cent
signed by either or the other of these gentle
sS da nUn western Union goes below &c within
for 5eoW ~ me may ouy 1t for whatever is selling
Ine privilege at the price agreed on-66-and re-
sa check LOT 600; the holder makes the diff
ference II Western Union does not 20 below 66
800. '"p' u pun - ou' LID
The .call" business operates In exactly the other
Union at 75 when it is selling at 10. II it sells
aooVe 20 you can call on the maker Of the pr1vi-
tge aSf aunared shares at 10 and the hundred
snares are thus bought by the holder for s., 800,
ana ne turns around and sells it at So II the stock
Is seling at That price and pockets the difference.
ma, SlIauuie' Is putt and "call" combined.
The holder OF one NAV tDutn stock tn the maker of
the privilege or .cal for it. That class OF priv
,egt comes nlgh because there is money In it
does not go at all but stands still the maker is in
lne money ne has been paid for the privilege,
IS tns alse
ence: A "straddle" is made at the market-that is
10 say, the maker OF the privilege takes the risk
tent from the price at which it is selling when the
privilege Is sold. In a ''spread" the maker has
more leeWay II Western Union is selling at TO- the
" ana 80. II 1t goes below 81, the holder OF the
privilege can put the stock to the maker and
the holder I Of tbe and It gees above
t iit, maker at that price and reap the profits.
But l1, SO long as the price Of the stock keeps
within those points the maker Of the privilege is
safe. To put it in another way the holder OF a
"straddle" will make il the market for the stock
ne is dealing In moves at all, whereas the holder
market moves past certai n limits
In the spring OF 1884 the holders OF privileges
Mllltsn ny Mr: sage TOOK nearly s, 100000 out OF
him, but Mr.. Mccain said there was a heap OF
money for all cautious and shrewd makers OF
privileges In the long run. The seedy-look1ng
men who peddle privileges ON New street nova.
days say that business is slow at the moment, as
me makers OF privileges ask too high a price for
Them Privileges are now sold in cottonseed OIL
certlflcateS, petroleum certificates wheat cotton
eggs, butter and coffee well as Stocks and sew
eral years ago, when the crop of fireworks for
to troubles between foreign and domestic manu-
facturerS privileges rockets and cargoes OF fire.
crackers and pinwheelS were hawked about
Maiden lane, the stamping ground OF the dealers
in pyrOtechnicS In this city.